Bet on The Jockey and Not the Horse

When people ask me how I invest in startups, I share the most important part of my strategy: bet on the jockey, and not the horse.

I first heard this analogy about 5 years ago from Michael Loeb, an incredibly successful entrepreneur, who shared this advice while graciously hosting a weekend trip for myself and other entrepreneurs. Nearly every seed investor says something similar – that the team matters more than the product – but this analogy stuck with me for several reasons:

  • It captures how distinct the two entities can be, yet how powerful in the right combination.
  • It makes it obvious who is driving success. A great horse will go nowhere without a passionate, savvy and motivated jockey racing against the competition.

When I made the transition from angel investor to institutional VC as a partner at High Peaks, I reflected on my years as an angel and realized that any mistakes I made were because I had not fully internalized this advice. My new partner Brad Svrluga had a similar experience over the dozen years as a VC; as he puts it: “I’ve always understood the jockey-horse lesson, yet every single year I feel like I learn it again and understand more and more how true it is.” The lesson really screamed out at us both, when we recounted our wins and losses. Our biggest mistakes came from when we compromised this value or thought there were enough compelling reasons to ignore it; our greatest successes came from embracing it.

Taking this strategy to the extreme, Brad and I made some bets on jockeys before they even had horses. Our first example is Akshay Navle. When I was first introduced by an angel investor, I had no idea what to expect. I took the meeting out of courtesy and scheduled just 30 minutes – which turned into 2 hours. Akshay told me amazing stories about his work and life and experiences, from building the ecommerce site for B&H to the long winding road between his start up and Quidsi (the parent company of Diapers.com). We got along well and I knew this guy was special – he had developed so many thriving and innovative businesses, yet he had a humility about him. He seemed like a young but talented jockey who expected his best race was still to come. We ended up working on a number of projects together, and last year, I brought him on at High Peaks as a Venture Partner.

Another favorite jockey is someone I met about a year ago when doing due diligence on a potential investment. I asked friends for contacts with experience in a specific industry, was introduced to Caleb Merkl, and was immediately blown away by how smart and insightful he is. We kept in touch and he later asked me for advice, since he wanted to be an entrepreneur but didn’t have a solid business idea yet. Like Akshay, Caleb seemed like a shooting star, so I convinced him to quit his job and become an Entrepreneur in Residence with us at High Peaks. That way he could learn from our approach and network, while developing his own business.

The plan worked well, and after about 6 months with us, Caleb teamed up with Akshay to develop a great idea and co-found a business together, with High Peaks as a seed investor. We may have lost an EIR and Venture Partner, but are more excited than ever because we get to be involved in this next journey. They are still in stealth, but we can’t wait to share more soon.

Brad and I love what we do because of this opportunity to work with great people.   We value great jockeys first and foremost (like Marc Lore of Jet.com or Rahul Gandhi at MakeSpace), and this is the foundation for how we invest in people, not just companies, at High Peaks.

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